US-based rating agency Fitch kept India's sovereign rating unchanged at 'BBB-', the lowest investment grade with stable outlook, citing weak fiscal position. It, however, expects India's growth rate to accelerate to 7.7 per cent in fiscal 2017 and 2018, from 7.1 per cent in fiscal 2016. The Indian government, and several commentators have been questioning ratings assigned by global agencies arguing the country's economic fundamentals have improved significantly over the last few years, but not have taken into account by those rating firms.
The agencies were even slammed by the government's 'Economic Survey 2017', for following “inconsistent” standards while rating India vis-a-vis China, saying they have not taken into account reforms measures like GST, which is a “poor” reflection on their credibility. Fitch had last upgraded India's sovereign rating from BB+ to BBB- with stable outlook on August 1, 2006. It later changed the outlook to negative in 2012, and then again to stable in the following year. “The sovereign ratings at BBB- balance a strong medium-term growth outlook and favourable external balances with a weak fiscal position and difficult business environment.”
It added that the business environment is likely to gradually improve with the implementation and continued broadening of the structural reform agenda. “The impact of the reform programme on investment and real GDP growth will depend on how it is implemented and the extent to which government continues its strong drive to improve the still-weak business environment.”
